We Have Met the Recruiter, and He Is Us
Daniel S. Burgess
PITTSFIELD, Mass. -- Human resource managers, take note: To build a better work force, look to the nearest cubicle. Researchers at Ohio State University in Columbus revisited the results of 28 studies involving nearly 40,000 employees from a variety of occupations. They found that the retention rate of new recruits who were attracted by inside sources was significantly higher than that for those recruited by advertising or third-party employment agencies.
According to the report, which will appear in Human Resource Management Review, companies with retention rates of 30 to 70 percent that switch to in-house recruitment strategies can expect to see those rates increase by 8 to 10 percentage points. Co-author John Wanous, professor of management and human resources and of psychology at the university, said the results fit his theory of "realistic information." Employees who are recruited by friends or acquaintances are less likely to face unexpected disappointments and leave, because the decision to accept the position was based on an insider's knowledge of that workplace.
Wanous calculated the potential savings from a higher employee retention rate. A service-based company, like a national fast-food chain with 100,000 new employees per year, would save more than $9 million annually by increasing its retention rate to 59 percent from 50 percent.
The advantages of in-house recruitment run both ways, said John Dove, president of Dove Photonics in Rome, N.Y. "I feel more confident with recommendations from those on the inside." He said that employees recruit for both talent and longevity, and he noted that in his small company, which relies heavily on inside recruitment, a faith in his employees to find the right person has produced a veteran work force. "Once they come to work for me," said Dove, "they stay."
Christopher Duncan, human resources manager at the Coherent Laser and Semiconductor groups in Santa Clara, Calif., agrees that employee referrals benefit both the staff and the company. Coherent offers bonuses to successful in-house recruiters, but the cost of the program is minimal in comparison with advertising fees. Duncan added that the program yields excellent applicants, because the referring employees see the candidates as reflections of themselves. "We like our program," he said. "The employees like it as well."
Diversity at risk
Corning Inc. of Corning, N.Y., also appreciates inside recruitment, but recognizes its limitations. The company, which plans to formalize a "finder's fee" program for its staff in 2000, spends up to $250,000 per year for print and Internet advertising and can spend up to $18,000 per recruit through third-party employment agencies.
"The only danger is that employee recruitment tends to lower diversity," said Valerie Kennerson, recruitment marketing manager for Corning. While inside recruitment offers substantial benefits in employee job satisfaction, she said, "people tend to recruit mirror images of themselves."
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